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Why will there never be more than 21 million BTC?

3 min read

When choosing the number, did Satoshi consider that 21 “is the smallest positive natural number for which there are pairs of squares with different positive edge lengths that can be combined to form a square?”. Or was the pseudonymous BTC founder aware of the symbolism that esoteric circles attribute to 21 – including as a number of completion? Or, as is so often the case in life and at the crime scene, did colleague “coincidence” have a hand in it?

In fact, there is no mention of a limit of 21 million in the BTC whitepaper. Only with the mail in which Satoshi published the BTC whitepaper did the 21 million become official:

The total circulation will be 21,000,000 coins. It will be distributed to network nodes as they form blocks, with the amount halved every four years
every 4 years.

the first 4 years: 10,500,000 coins
the next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
the next 4 years: 1,312,500 coins

When that is phased out, the system can support transaction fees if needed. It is based on open competition and there will likely always be nodes willing to process transactions for free.

Satoshi NakamotoJanuary 8, 2009

So why exactly 21 million? As you can see from the email traffic between Satoshi and Mike Hearn, another BTC developer from the very beginning, the number does not have a metaphysical but a pragmatic background:

My choice for the number of coins and distribution plan was based on an estimate. It was a difficult decision because once the network is up and running it is fixed and we have to come to terms with that. I wanted to pick something where rates are similar to existing currencies, but without knowing the future it’s very difficult.

Satoshi Nakamoto to Mike Hearn, April 12, 2009

Satoshi was looking for the golden mean: Whether BTC should remain a niche or have great success, the limit should allow numbers that are not too bulky in both cases. Sathoshi explains the calculus to Mike Hearn like this:

If you imagine that [Bitcoin] used for only a fraction of world trade, then there will only be 21 million coins for the whole world, so one unit would be worth a lot more. The values ​​are 64-bit integers with 8 decimal places, so 1 coin is represented internally as 100000000. There’s a lot of granularity when typical courses get small. For example if 0.001 [Bitcoin] is worth 1 euro, it might be easier to change the position of the decimal point.

Satoshi Nakamoto to Mike Hearn, April 12, 2009

21 million: Exactly

Maybe it wasn’t the 21 either millions, but the 50 BTC per block – in connection with the targeted block time of 10 minutes – at the beginning of the considerations. Because the 21 million is also a mathematical consequence. It is obtained by multiplying the number of blocks produced (210,000 per year) by the sum of the halving rewards (50 + 25 + 12.5 + … 0 ≈ 100). The question remains which came first – the limit or the mining protocol.

When is the last BTC Halving – and what happens then?

First of all: Despite all the advances in medicine, it is unlikely that the gentle reader will witness the last halving: Because this will – as of today – take place around the year 2140. So a crypto world where the last BTC was “mined” is Terra Incognita. In this scenario, transaction fees provide the only source of income for miners. For this reason, there were early considerations to increase the block size in order to be able to accommodate more transactions (and thus more fees) in one block. The argument about the block size already accompanies BTC from beginning to and has already resulted in several spin-offs (hard forks).

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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